Peace of mind?

Research recently commissioned by the International Stress Management Association UK and Royal & SunAlliance revealed that 70% of UK adults have experienced stress in the workplace, with nearly half of those (49%) indicating that this had increased over the last 12 months.

Health and Safety Executive figures for 2003/4 also show that over half a million workers experience work-related stress at levels that made them ill. The HSE also estimates that nearly one in five of all working individuals thought their job was very or extremely stressful.

Despite this and a corresponding increase in stress-related claims, provision from private medical insurers has not shrunk back as much as may be expected.

Providers claim that private medical insurance with inclusive psychiatric care cover sells in greater numbers than plans without. Furthermore, those with mental-health problems are less stigmatised - and, with employers more aware of their obligations regarding employee benefits, providers could, in fact, be on the brink of a surge of new business.

While providers commonly exclude stress, they do cover other illnesses triggered by stress. Generally, the acute conditions covered under most PMI plans include depression, eating disorders, severe anxiety, obsessive/compulsive disorder and phobias - provided they are not pre-existing at the time the policy is taken out. Conversely, chronic conditions such as dementia, Alzheimer's disease, schizophrenia and other forms of psychosis are not typically covered. This means that, for those suffering the most seriously debilitating psychological conditions, PMI does not address their needs.

In the event that a policyholder does claim, a typical PMI plan will provide a maximum of 28 days in-patient or day-patient care per year and between £1000 and £1500 for out-patient treatment. These limitations raise the question of what happens if a client has not fully recovered at the end of a 28-day period and questions whether PMI is at all effective in tackling psychological problems.

"We withdrew psychiatric care from our individual private medical insurance plans about two years ago because it was not very clear to customers what they were covered for," says Charlie MacEwan, head of communications at WPA. "We also did not feel comfortable offering the facility when there was the possibility that some of our policyholders could be left in the lurch at the end of 28 days."

While these fears are understandable, other providers claim that the treatment period is more than long enough. "We have consulted staff nurses at psychiatric clinics and the average stay for in-patients and day patients is around 14 to 21 days," says Julian Ross, marketing manager at Standard Life Healthcare.

It also appears that in-patient care constitutes a relatively small part of providers' spending on psychiatric treatments. "The vast majority of claims we receive are for no more than a few out-patient visits to a counsellor or a psychologist," says Fiona Harris, head of risk at BUPA.

Cost of care

However, the cost difference between PMI plans with psychiatric care and those without is surprisingly small in the corporate sector. To include access to mental-health services in a plan would increase the premium by between 1% and 3% for a corporate client. Some insurers sometimes offer up to 90 days in-patient cover for an extra 1% to 2% on top of this, depending on a good claims history.

Standard Life Healthcare goes even further, allowing corporate clients to take out up to 180 days in-patient cover with no limit on out-patient spending as part of its most comprehensive plan.

Individuals do not receive such a good deal when they seek psychiatric provision, however. It is often only available in the most comprehensive plans along with a whole raft of extra benefits that make it difficult to calculate the additional cost of psychological care. Axa PPP healthcare's standard PMI product, Ideal, does not offer psychiatric cover and limits additional service such as physiotherapy to £800 of treatment a year.

Urging early intervention may have proven benefits but, with providers wording policies so confusingly, it is difficult to see how any attempts to action early intervention would ever work.

Although stress itself is not covered in most policies - as it is not an acute condition that has a specified treatment - BUPA provides cover for stress as a condition in itself. "We will offer psychiatric care to a client who is stressed if they have a referral from a GP," says Harris.

However, the difference here is purely semantic as the two different wordings amount to essentially the same thing. It is not, therefore, difficult to imagine how clients can become confused about what they are covered for.

Another grey area that can bewilder clients is providers' approach to self-inflicted injuries. A recovering alcoholic, for example, may suffer severe depression as they undergo the early stages of rehabilitation.

Drug abuse also poses the risk of a number of serious and permanent mental-health problems, including psychosis. When a psychological disorder has been brought on by a client's own actions, insurers can actually be surprisingly accommodating.

So, while the psychiatric care available on PMI plans is not a long-term health-management solution, it is an effective option for fast and efficient treatment of illnesses that erupt with little warning and have the potential to be devastating.

Brokers generally can be satisfied with the level of psychiatric cover available on existing PMI plans since all but the most seriously ill can be treated effectively within the set cost and time limits stipulated by insurers. But, with regulation now in force it is more important than ever that prospective clients are clear on what they will be covered for in the event of a mental illness. MacEwan concludes: "The primary problem with psychiatric care is one of transparency; it isn't very clear to the customer what they are or are not covered for. We need to be unequivocally clear because, in this day in age, any grey area will be scrutinised and picked apart."